PRECIOUS-Gold rises from over 3-week low on bargain hunting

Reuters Staff

4 Min Read

* Spot gold may test a support at $1,316/oz - Technicals
* Palladium off near two-month lows
* Platinum crawls away from over three-week lows
(Updates prices)
By Nithin ThomasPrasad
Feb 7 (Reuters) - Gold prices rose on Wednesday as investors
used dips to accumulate the yellow metal after it dropped more
than one percent to its lowest in over three weeks in the
previous session.
Spot gold was up 0.5 percent to $1,331.23 per ounce,
as of 0722 GMT. Prices fell over 1 percent to hit its lowest
since Jan. 11 at $1,319.96 on Tuesday.
U.S. gold futures for April delivery rose 0.3
percent to $1,333.50 per ounce.
"Some dip-buying is coming back aggressively as the
volatility index drops. Also, some good buying as the short-term
U.S. (interest) rate curve is easing off a bit," said Stephen
Innes, APAC trading head for OANDA.
"(Prices are) well above major support and appetite is
coming back, with longer-term traders still holding and steadily
buying small clips from this morning Comex open."
Asian share markets were trying to find their footing on
Wednesday as a semblance of calm returned to Wall Street where
major indices bounced into the black after days of deep losses.
Distressed selling by leveraged funds seemed to have run its
course at the moment, allowing volatility to slightly abate,
though the prospect of monetary tightening across the globe
remained a challenge for the long term, analysts said.
Unless the market plunge intensifies and damages the
economy, U.S. Federal Reserve policymakers is unlikely to budge
from their plan to lift key short-term interest rates three
times this year, some analysts said.
However, traders dialled back bets the U.S. central bank
would ratchet up the pace on rate increases on Monday to between
two and three hikes from three to four hikes last week,
according to interest rates futures.
Meanwhile, SPDR Gold Trust , the world's largest
gold-backed exchange-traded fund, said its holdings fell 1.44
percent to 829.27 tonnes on Tuesday from 841.35 tonnes on
Monday.
Holdings saw their worst one-day fall since December 2016.
"Gold did not particularly perform well when stocks were
melting down, while seeming to crumble rather effortlessly in
the aftermath of Tuesday's sharp rally," INTL FCStone analyst
Edward Meir said.
"This may tell us that the gold complex is more vulnerable
to the downside at this stage, especially if the stock market
stabilizes."
Spot gold may test a support at $1,316 per ounce, as
suggested by a retracement analysis and a head-and-shoulders,
according to Reuters technical analyst Wang Tao.
Spot silver climbed 0.8 percent to $16.77 per ounce.
Platinum gained 0.2 percent to $991.00 per ounce
after touching its lowest since Jan. 16 in the previous session.
Palladium edged 0.2 percent higher to $1,010.50 per
ounce. In the previous session, it touched $999.22 an ounce, its
lowest since Dec. 8.
(Reporting by Nithin Prasad and Nallur Sethuraman in
Bengaluru,; Editing by Sherry Jacob-Phillips)